Daily Tech Snippet: Wednesday, December 9

• It’s Come to This: Yahoo’s Future Now Hinges on Taxes (And Not Products):  Yahoo is not going to spin off its 15% stake in e-commerce giant Alibaba, according to sources cited by CNBC. Instead, Yahoo is going to look into selling its core Internet business. Yahoo’s core business includes its web properties, apps, search, media, ad business, etc. Yahoo’s 15% stake in Alibaba is worth around $32 billion, while its core Internet business is worth anywhere between $3.4 billion and $4.1 billion, according to analysts. Internet companies are about a lot of things, but primarily their success hinges on making great and innovative products. And unless the execution of getting those offerings out is just abysmal, this trumps all in Silicon Valley. That was the alleged promise of bringing in Google wunderkind Marissa Mayer as Yahoo CEO more than four years ago. Now the company’s fate seems in the hands of tax attorneys, rather than entrepreneurs, which tells you all you need to know about Yahoo at the end of 2015. Last week, Re/code and others reported that the board of the Internet giant was seriously considering pausing the spinoff of its enormously valuable stake in China’s Alibaba Group. The reason: While Mayer and Yahoo CFO Ken Goldman were assured by their pricey tax advisers at Skadden Arps that the transaction would be tax-free, the Internal Revenue Service would not provide any guarantee of that. No spinoff puts Yahoo into play in a very significant way, even if the board does not say so. And none of it has anything to do with creating great products for consumers, which was the only thing that would have saved Yahoo in the first place. Score one for the accountants.

• Google’s High-End Pixel C Tablet Launches to Tepid Reviews: In September, Google surprised us all when it announced its Surface competitor, the 10.2-inch Pixel C Android tablet with its optional Bluetooth keyboard. Unlike its Nexus line of tablets, this is the first time Google has built its own tablet. If you’re willing to pay the price — starting at $499 for the 32GB model plus another $149 for the keyboard — the Pixel C is a very nice, solid tablet that sits atop the current crop of Android tablets. At that price, it directly competes with the iPad Air 2 (though the basic model of the Air only comes with 32GB of storage space). The Pixel C is now available in the Google Play store in a select number of countries. You can now buy it in the U.S., Canada, Germany, Ireland, Austria, Australia, New Zealand, Hong Kong, France, Spain, Belgium, Netherlands and Switzerland. If you think this tablet/keyboard combo sounds a little bit like a Microsoft Surface, or maybe even Apple’s iPad Pro with a keyboard, you’re not alone. It’s impossible not to compare the C with them. While Microsoft’s Surface is essentially a fully featured laptop with a detachable keyboard, Google and Apple are opting for a combination of a tablet and mobile operating system with a keyboard. There is a market for the C, but I think it’ll be a small one. The Pixel Chromebooks were meant to show what you can build when you don’t cut corners to keep the price down — the C is meant to showcase what that would look like for a high-end Android productivity tablet. It’s the Android Tablet for the CEO — assuming your CEO uses Android.

• In China's O2O tech, today's 'unicorns' risk becoming tomorrow's 'unicorpses': The Beijing offices of Shequ001, a start-up delivering supermarket goods booked via smartphone, stand almost deserted. Leaflets lie scattered on the floor. Nearly 400 former employees, of a workforce that in March topped 2,000, have joined a social network clamoring to get their unpaid wages. Zhang, who gave only his family name, is one of fewer than three dozen workers left at a company that last year was worth 2 billion yuan ($312 million). "We just wanted to build the market, so we burned through our money," he said, adding he hasn't seen the firm's CEO since March. In China's hottest tech sector, hundreds of "online to offline" (O2O) start-ups like Shequ001, which draw mobile users to local physical stores and services, have failed as skyrocketing valuations deter investors and put the brakes on fresh funding. Many more are expected to fall by the wayside, or be driven into mergers in what executives and investors say is a market bubble. China now boasts 21 'unicorns' - private start-ups valued at over $1 billion - says CB Insights. But now, those inflated valuations - for companies that rarely make any money - are proving too much for investors and new funding is drying up. O2O has found particular traction in China through a combination of widespread smartphone use, a booming mobile payment sector and cheap migrant labor. Entrepreneurs developing O2O apps - for firms offering anything from ride hailing and food delivery to group discounts at shops, restaurants and cinemas - have had easy access to money from technology giants Baidu, Alibaba and Tencent, as well as from venture capitalists, private equity, sovereign wealth funds and state-owned enterprises. Start-ups backed by venture capital raised $9.6 billion in July-September alone, four times the level of a year earlier, according to a KPMG and CB Insights report. "The whole O2O concept is getting too expensive," said Han Weiwen, head of Bain's private equity practice in China. "The valuation is very, very high. There's no traditional way to look at the valuation ... because they don't have revenue." The fierce competition and high spending drives start-ups back to their investors for frequent cash injections, pushing valuations higher. But as the financing roller-coaster has slowed, many start-ups have struggled to afford the subsidized discounts they need to keep users. In O2O, user numbers, whether from inflated demand or not, are a key metric to attracting fresh investment. "This kind of craziness can't go on forever," said Liu Jun, who heads Baidu's efforts in O2O and sits on the board of Uber's China unit. "Enough is enough."

• Apple Executive Seeks a Touch of Chic at Retail Stores: Angela Ahrendts, Apple’s senior vice president of retail, got a private demonstration of the fancy wireless speaker, the Phantom, and its sound quality seven weeks ago. On the spot, she said she wanted the space podlike device, which starts at $1,990, to be sold in Apple’s retail stores. This week, the Phantom will appear in 14 Apple stores in the United States, and the company is discussing how widely to roll out the product next year. The device will get the sort of prominent display treatment that is typically reserved in Apple stores for the company’s Beats audio accessories. The move is an indication of how Ms. Ahrendts, who started at Apple last year, is changing the playbook at some of the iPhone maker’s stores this holiday season and the direction she’s going in: ultraluxe. Apple’s stores typically spotlight the company’s devices, with the most expensive audio accessories topping out in the hundreds of dollars. The Phantom is the first high-end non-Apple gadget that Ms. Ahrendts, the former chief executive of the fashion house Burberry, has brought in since she took the job. It buttresses some of her other recent moves to create more of a luxury Apple retail experience, including initiating private try-on appointments for the most expensive Apple watches, reducing the numbers and types of accessories that are sold, and pushing manufacturers to make special packaging for gadgets carried in Apple’s stores. Apple has traditionally sold the most expensive accessories online only, like the $2,700 B&O BeoPlay A9 MKII speaker. “I asked Tim a very simple question: Why do we do it this way?” she said of her boss, Timothy D. Cook, Apple’s chief executive. Mr. Cook told her he didn’t know, she said